Is Origin Energy Limited (ASX:ORG) Overpaying Its CEO?

Frank Calabria has been the CEO of Origin Energy Limited (ASX:ORG) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Origin Energy

How Does Frank Calabria’s Compensation Compare With Similar Sized Companies?

Our data indicates that Origin Energy Limited is worth AU$14b, and total annual CEO compensation was reported as AU$4.6m for the year to June 2019. We note that’s an increase of 12% above last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$1.7m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from AU$5.8b to AU$17b, and discovered that the median CEO total compensation of that group was AU$4.1m.

So Frank Calabria receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Origin Energy, below.

ASX:ORG CEO Compensation, September 16th 2019
ASX:ORG CEO Compensation, September 16th 2019

Is Origin Energy Limited Growing?

Over the last three years Origin Energy Limited has grown its earnings per share (EPS) by an average of 87% per year (using a line of best fit). In the last year, its revenue changed by just 0.9%.

This demonstrates that the company has been improving recently. A good result. It’s also good to see modest revenue growth, suggesting the underlying business is healthy.

Has Origin Energy Limited Been A Good Investment?

Most shareholders would probably be pleased with Origin Energy Limited for providing a total return of 62% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Frank Calabria is paid around what is normal the leaders of comparable size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! Shareholders may want to check for free if Origin Energy insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.